Richard Curran: The five key business measures you need to know
MICHAEL Noonan has decided to use the €600m from the softer budget, to target specific measures at particular aspects of job creation.
The pensions industry won’t be too pleased about the new 0.15pc levy, but the tourism and hospitality sectors will be very pleased with the retention of the 9pc VAT rate. There is also good news for the property and construction sector and those interested in setting up a new business.
The declaration that in the future every company must be resident in some country, and not be “stateless”, could have significant implications for the multi-nationals here.
Here are five key business measures:
1.Tourism: The hospitality sector will retain the lower 9pc VAT rate. The measure was due to end this year. Keeping it in place is a very welcome decision for the likes of restaurants and hotels. Tourism is on a bit of a roll and perhaps too much has been attributed to the lower VAT rate, but it is a help. Tourism and hospitality jobs are created in rural areas not just in cities. This makes them all the more valuable to the economy and keeping people in work.
2. Property and Construction: Capital Gains Tax exemptions on commercial property purchases were due to run out this December. They have now been extended by another year. That will help underpin commercial property purchases including those buying houses as buy-to-lets.
An incentive scheme on renovations and refurbishments should also stimulate more building jobs.
3. Entrepreneurs can benefit from a new lower Capital Gains Tax regime if they are prepared to re-invest the proceeds of their gains, back into their businesses. By putting capital gains cash into production or training they can lower their overall bill. This is a measure which is aimed at encouraging entrepreneurs by not hitting them with a straight hefty capital gains charge.
4. Getting off the dole: If you are long term unemployed (15 months or more) and you set up a company or become self-employed, you can benefit from an income tax exemption for the first two years. This might help enourage plasterers, carpenters and other former construction workers to have a go and working for themselves.
5. Foreign Direct Investment: There is a genuine question now over whether the government has blinked in relation to multi-nationals and international tax avoidance. By saying that in the future companies will have to be resident in some jurisdiction instead of using various jurisdictions to be “stateless”, Michael Noonan may be signalling a change of approach. Depending on the detail, this may be a key step in undermining some of the manoeuvers used by global multinationals to reduce their tax bills.